Circular Supply Models are one of Circular Business Models (CBMs).
Circular Business Models (CBMs) are designed to turn all that waste that businesses and consumers generate into useful and valuable resources that can be used again in a sustainable way.
There are five commonly Circular Business Models (CBMs) as defined by Organization for Economic Cooperation and Development (OECD) including:
- Circular Supply
- Resource Recovery
- Product Life Extension
- Sharing
- Product Service System
Let’s take a look at how businesses operate under these five categories.
What are Circular Supply Models?
Circular Supply Models focus on replacing finite natural resources with renewable, recyclable and biodegradable resources in a sustainable way. The use of these scarce resources applies to the production process as well as all other areas of business activity.
This supply chain management strategy aims to extend the life of products and materials by eliminating waste and reusing resources.
Circular Supply Models contrast with the traditional linear supply chain model, which takes raw materials, produces products, and then discards waste. Unlike a linear business model, Circular Supply Models require businesses to develop new and more efficient uses of waste as resource inputs.
Thereby, reducing society’s reliance on finite and non-renewable and extracted natural resources such as fossil fuels. Instead, businesses use bio-based, renewable and recovered materials in a sustainable yet profitable manner.
Examples of Circular Supply Models
Example 1: Science-based companies have developed ways to convert agricultural residue such as bales, husks, leaves and stalks) into renewable fuel.
Example 2: Interface is a manufacturer of carpet tiles that designs its products to be easy to install, remove, and reuse. The company also has a take-back program that allows customers to return used carpet tiles for recycling.
Example 3: IKEA is a furniture retailer that is committed to using renewable resources and reducing its environmental impact. The company has a number of initiatives in place to support Circular Supply Model, including a program that allows customers to return used furniture for resale or recycling.
Example 4: Patagonia is an outdoor clothing retailer that is known for its commitment to sustainability. The company has a number of initiatives in place to support Circular Supply Model, including a program that allows customers to return used clothing for repair or recycling.
Example 5: Veolia, a French multinational company, burns poultry litter and scrap wood to turn into electricity. Veolia uses Circular Supply Model for all three aspects of its operations – water management, waste management and energy services.
Benefits of Circular Supply Models
Circular Supply Models, as with all the other types of Circular Business Models (CBMs), allow businesses to reduce harmful impacts of their operations on the natural environment and work on more sustainable basis.
As the earth’s resources dwindle, they become more expensive, so adopting a Circular Supply Models can help businesses to remain viable. They can help businesses to reduce costs by reducing waste, using less energy and water, and finding ways to use recycled materials.
Hence, in the long-run, it can become more profitable for businesses to adopt a circular supply approach to resource use and waste management.
Challenges of Circular Supply Models
Implementing Circular Supply Models can be expensive, especially in the initial stages.
Consumers may not be willing to change their behavior to support Circular Supply Models.
Finally, some Circular Supply Models require new technologies that may not be readily available.
In summary, Circular Business Models (CBMs) focus on multiple-use resources and products which are reused and remain in the economy for as long as possible. They are decision-making tools that focus on the environmental impacts of business activities through circularity – reducing, reusing, repairing and recycling raw materials, products and waste.
